PTT Polymer Marketing Company Limited

10
th
International PTT Polymer Seminar
ChiangRai,November17,2013
NarongchaiPisutpunya
China Shale Gas
Market Outlook
10
th
International PTT Polymer Seminar
PTT Polymer Marketing Company Limited
ChiangRai,November17,2013
NarongchaiPisutpunya
ShaleRocklikesaSponge
Sponge
ShaleRock
ShaleGasDrilling
Source:DowChemicalDatabook2011
NowN.AmericaEthaneHasASignificantAdvantage
GlobalShaleGasresources
WorldShaleGasReserve=66mbpd for30years!
China ranks first in terms of global shale gas reserved
Its very difficult for China to Develop Shale Gas
Chinawillnotbeabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
China production cost cutting
Costcanbereducedbyasmuchas50%ifoperatorsmaximizetheuse
oflocalequipment,technologyandengineers.
ChineseFieldEngineeris80%cheaperthantheForeignEngineer
Its very difficult for China to Develop Shale Gas
Chinawillnotbeabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
Chinas gas pipeline network,
ThetotallengthofChinasnaturalgaspipelineasofend2012wasaround50,000km
anditwillbeextendedto100,000Kminthenext5years!!
TheSpeedoftheChineseConstructionVDO
Its very difficult for China to Develop Shale Gas
Chinawillnotbeabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
Chinasgaspricereforms
Startingin2011,Chinahas
deregulatedthepricingof
unconventionalgases(shalegas,
coalbedmethaneandcoaltogas)
toencourageupstream
development.
InJuly2013,Chinaraisedcitygate
naturalgaspricesc.15%onaverage
andpromisedtomoveprices
towardsinternationalparityby
end2015,implyingac.60%rise
fromcurrentlevels.
Chinastartedderegulatednaturalgasprice
Its very difficult for China to Develop Shale Gas
Chinawillnotbeabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
China setup National Energy Shale Gas R&D Centre in
August 2010
JVwithInternationalOilGiantstogainTechnology
Its very difficult for China to Develop Shale Gas
Chinawillnotbeabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
Sufficient Water Resource in Shale-Rich Region
Over50%ofwaterresourcesareavailableforuseinmostshalerichregions
Innovation Water Tank Foldable Tank
Easy and Cheaper for transportation & Installation
Its very difficult for China to Develop Shale Gas
Chinawillnot beabletoreplicate
theUSsuccessbecause:
(1) Higherproductioncosts,because
resourcesaredeeperunderground;
(2) Chinadoesnothavegaspipinggrid;
(3) Chinaregulatednaturalgasprice;
(4) Chinadoesnothavetechnologyand
expertise;
(5) Chinadoesnothavesufficientwater
resources.
Nothing is Difficult for the Chinese
ChinawillbeabletoreplicatetheUS
successsince:
Productioncostscutby50%,using
localmadeequipment/local
engineers;
Chinaisexpandingthegaspipegrid;
Chinahasstartderegulatednatural
gasprice;
Chinahasseveralforeignpartners
(Shell/Eni /Chevron/
ConocoPhillips)
WaterisnottheissueinShaleGas
RichAreas
19 Successful Bidders for Shale Gas Development
September2012
ShalegaswellsdrilledasofendMarch2013
China Shale Gas Production will grow 55-85% pa!
Sinopec plan 1 MMTPA ethylene cracker from Shale Gas
InJune2013,SinopecannounceditsplantobuildChinasfirstgas
basedethyleneplant(USD3bn,withanannualcapacityof1mn
tonnes)inQingdao,Shandongprovince.
Ethylene Cost based on Shale Gas in China VS US
Conclusion:
China had successfully overcome all
the challenges on Shale Gas
Development
China Shale Gas Output will grow 55-
85% per year and by 2020 China Shale
Gas out put will be 60-80 billion cubic
meter (around 20-25% of US shale gas
output on the same year)
Ethylene cost based on China Shale
Gas is also very competitive though the
NG price will be double compared to the
USGC NG price.